My wife and I live in Alabama. She works in Alabama and I work in Mississippi. How do I file state income taxes for this situation? Do I file jointly in both AL and MS with all income from both of us? That is the way I think I have to do this but can not seem to find a definitive answer.

If you are present in a state, then any income earned during this period, must be reported to the state.

To your resident state, you must report your worldwide income for the year.
Read: Your U.S. Tax Return: Working or Living in Two or More states (http://taxipay.blogspot.com/2008/06/working-in-two-or-more-states.html)